Environ. Sci. Technol. 2002, 36, 2122-2129
High-Value Renewable Energy from Prairie Grasses S . B . M C L A U G H L I N , * ,† D. G. DE LA TORRE UGARTE,‡ C. T. GARTEN, JR.,† L. R. LYND,§ M. A. SANDERSON,⊥ V. R. TOLBERT,† AND D. D. WOLF| Oak Ridge National Laboratory, P.O. Box 2008, Oak Ridge, Tennessee 37831, Agricultural Policy Analysis Center, The University of Tennessee, Knoxville, Tennessee 37996, Dartmouth College, Hanover, New Hampshire 03755, USDA-ARS, Curtin Road, University Park, Pennsylvania 16802, and Virginia Polytechnic Institute and State University, Blacksburg, Virginia 24061
Projected economic benefits of renewable energy derived from a native prairie grass, switchgrass, include nonmarket values that can reduce net fuel costs to near zero. At a farm gate price of $44.00/dry Mg, an agricultural sector model predicts higher profits for switchgrass than conventional crops on 16.9 million hectares (ha). Benefits would include an annual increase of $6 billion in net farm returns, a $1.86 billion reduction in government subsidies, and displacement of 44159 Tg/year (1 Tg ) 1012 g) of greenhouse gas emissions. Incorporating these values into the pricing structure for switchgrass bioenergy could accelerate commercialization and provide net benefits to the U.S. economy.
Introduction The true social costs of energy include not only the prices that are reflected in market exchange but also the other direct and indirect nonmarket costs and benefits (externalities) associated with the acquisition, processing, conversion, and use of that energy. Global warming, acidic deposition, groundwater contamination, and human health effects are just some of the environmental costs associated with the use of fossil fuels that are not reflected in their market prices (1). Oil dependency has also engendered economic costs estimated at up to $233 billion/year over the past 30 years as a result of periodic oil price shocks (2). A growing awareness of the social costs of fossil fuels (1) and the awareness of potential limitations in mid-term oil supply (3) has highlighted the need to consider alternate, more sustainable, and less ecologically expensive energy sources. Bioenergy systems that use cellulosic feedstocks that are indigenous, and can be diverse in origin and type, are projected to have significantly lower social costs than fossil fuels (4). Cellulosic feedstocks are available from forestry and mill residues, urban wood wastes, agricultural residues, and dedicated energy crops. They can be used to produce clean-burning liquid fuels such as ethanol (5, 6), electricity (7), and bio-based chemicals (8). Bioenergy and bio-based * Corresponding author phone: 865-574-7358; fax: 865-576-9939; e-mail:
[email protected]. † Oak Ridge National Laboratory. ‡ University of Tennessee. § Dartmouth College. ⊥ USDA-ARS. | Virginia Polytechnic Institute. 2122
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products offer the potential for significant economic and environmental benefits to society including near-zero net emissions of greenhouse gases (GHG), improved soil and water quality, and increased net economic returns to a depressed rural economy. While support for expanding the use of bioenergy and bio-based products has increased (9), the benefits of biomass-based systems are not currently reflected in the market prices of cellulosic bioenergy. A number of companies dedicated to expanded commercial production of power and fuels from biomass have formed in recent years. The competitive potential of these companies has been impeded by the relatively low cost of fossil fuels as well as by the relative immaturity of the processes that produce high value forms of energy from biomass. Incorporation of social and environmental benefits into market prices has the potential to substantially accelerate the deployment of a new generation of technologies based on cellulosic biomass. However, this requires that the value of such benefits first be quantified. This paper focuses on quantifying social and environmental costs of production of one potential cellulosic feedstock, switchgrass (Panicum virgatum), a native, perennial, warm season prairie grass. We compare aspects of the market price and social cost of energy derived from switchgrass produced as a dedicated energy crop with costs and values associated with fossil fuels, primarily oil, and natural gas. In this process, we consider several important factors in switchgrass production, including its regional competitiveness with conventional agricultural crops, economic returns to agriculture, reductions in net GHG emissions resulting from both fossil fuel displacement and soil C sequestration, and the benefits of reduced soil erosion and improved water quality.
Analytical Framework Our analyses are based on the utilization of switchgrass as a feedstock for the production of both ethanol and electric power. Switchgrass has been selected by the U.S. Department of Energy (DOE) for research as a model bioenergy crop (10). It is a fast growing resource-efficient species that was an important component of the precolonial tall grass prairie. Its natural geographical range includes most of the eastern two-thirds of the United States. Switchgrass can be managed and harvested with the standard agricultural equipment currently used to annually produce hay on 30 Mha; thus, switchgrass production is compatible with existing farming operations over much of the United States. Recent economic analyses (11) indicate that switchgrass produced as a dedicated energy crop could be competitive in the U.S. agricultural sector. These economic analyses have been augmented by recently published life-cycle analyses (LCA) based on comparative emissions of GHG or net energy returns of switchgrass or other renewable fuels as compared to fossil fuels (12-14). Combined here with new analyses on economic and ecological consequences of increased switchgrass production, and new findings of the dynamics and potential significance of C sequestration in soils by switchgrass, these studies provide a basis for a more comprehensive analysis of the potential ecological and economic competitiveness of cellulosic energy with fossil sources. In the following sections, we first address net economic values and then examine those values collectively in relationship to projected prices of bioenergy fuels and policy options that could accelerate their incorporation into energy markets. 10.1021/es010963d CCC: $22.00
2002 American Chemical Society Published on Web 04/09/2002
FIGURE 1. Potential switchgrass production within the United States by production density within agricultural supply cells. Projected production density is based on the distribution of land that converts from conventional agriculture to switchgrass production at a farm gate price of $44/Mg ($53.8/Mg delivered).
Agricultural Economics and Demographics From a market price perspective, the economic viability of switchgrass as an energy feedstock requires that it provide an economic return to farmers greater than that derived from their current use of agricultural lands and that it be price competitive with alternative fossil fuels for industrial users. To evaluate the economic competitiveness of switchgrass with existing agricultural uses of cropland, we used an agricultural sector model (POLYSYS) (see Supporting Information for a detailed description of the model, regional bioenergy crop yields, and production costs). The model was developed in a joint project involving the DOE, U.S. Department of Agriculture (USDA), and University of Tennessee economists, and it has been used to document the impacts of large-scale bioenergy crop production of the U.S. agricultural sector and the potential competitiveness of bioenergy crops with existing uses of agricultural cropland (15, 16). POLYSYS is anchored to USDA baseline projections, allocates land area across 305 agricultural statistical districts (ASDs) based on expected relative profitability, and is subject to market demand and flexibility constraints. For this paper, the ASDs were aggregated into five regions (Figure 1). Our analyses projected that, at a national average annual yield of 9.4 Mg/ha and a feedstock price of $44.00/dry Mg (farm gate), more than 16.9 Mha of switchgrass could be enrolled with a production capacity of 158 dry Tg (1 Tg ) 1012 g). At that production level, farm income would be expected to increase by $6.0 billion annually over USDA 1999 baseline projections. These returns include $2.3 billion from increased income to producers from switchgrass sales as well as $3.7 billion derived as a general benefit to agriculture from increased prices of conventional crops. The latter benefit
TABLE 1. Influence of Feedstock Price on Amount and Distribution of U.S. Land Area Projected by an Agricultural Sector Model (POLYSYS) To Be Converted to Switchgrass Production by Year 2004a Land Area (× 1000 ha) Converted to Switchgrass Production feedstock price ($/Mg) land source croplands CRP lands idle lands pasture total
$30.31
$44.00
$52.37
2480 585 0 0 3065
9352 5221 847 1410 16830
12069 5387 2511 1337 21303
a Abbreviations are as follows: NE ) northeastern states, SE ) southeastern states, NC ) north central states, SC ) south central states, NP ) northern plain states.
results from reduced acreage of these crops as land is shifted to switchgrass production. Production is projected to be distributed throughout the eastern two-thirds of the United States, with greatest acreage in the plains and midwestern states. Both the type and amount of land area converted to switchgrass will be strongly influenced by feedstock price (Table 1). Most switchgrass production is projected to come from the reallocation of land currently planted to the major crops, but at $44.00/dry Mg, 5.2 Mha (31% of the total area) comes from areas under Conservation Reserve Program (CRP) contracts (17). As noted in the previous discussion, POLYSYS model simulations indicated that the production of switchgrass will affect both the production and the market prices of traditional crops such as corn, soybeans, and wheat. As a result of converting 11.7 Mha of cropland in traditional crops to VOL. 36, NO. 10, 2002 / ENVIRONMENTAL SCIENCE & TECHNOLOGY
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switchgrass, the production of the major crops will decrease. By 2008, projected reductions in land area planted to corn (1.5 Mha), wheat (2.5 Mha), soybeans (1.4 Mha), and cotton (0.3 Mha) could increase the prices of these crops by 1015%. This will have the effect of reducing loan deficiency payments (LDP) that were established to provide farmers cash payments for crops when prices fall below established target prices. Those payments are the result of a complex set of government programs that were incorporated in the last U.S. federal farm bill, FAIR (18), which was designed to support the economic performance and stability of the agricultural sector and the safety of the food supply. As has occurred since 1998, prices for most commodities included in the marketing loan program have been consistently below target prices, originating annual LDP payments of $9.5 billion for the period 1996-2000. Because of improved crop prices associated with increased switchgrass production, smaller federal crop support payments are projected. At a switchgrass production level of 16.9 Mha ($44/Mg), for example, an estimated $1.86 billion savings in annual federal expenditures could be realized, a value that will be discussed in overall context later.
Ecological Costs and Benefits Soil Erosion, Water Quality, and Wildlife Values. A shift from traditionally more energy-intensive annual row-crop agriculture to a perennial grass energy crop has important implications for stabilizing agricultural soils, reducing erosion, and improving water quality (19). As a replacement for annual crops, warm season grasses have also been shown to provide important habitat for wildlife, including game birds and other species threatened by the loss of tall grass prairie habitat (20). These and other ecological benefits of warm season grasses have been well-demonstrated by the CRP, which was established by Congress in 1985 to remediate the effects of decades of annual row-crop production. Among those effects were depletion of 25% (55 GT) of the soil C in U.S. croplands (21) and significant impacts on soil erosion, soil productivity, and regional water quality. In CRP efforts to reduce erosion and protect wetlands, 90% of designated lands were planted to native grasses, including switchgrass. The CRP has represented an annual investment in agronomic and ecological values of $2 billion, which, over the 1986-1999 time window, has had estimated net economic benefits of $13-$43/ha‚year (22). The gross value of environmental benefits (cost plus net benefits) is estimated at $24-$54/ha‚year. An essential question related to potential utilization of CRP lands for energy crop production is whether a perennial grass energy crop, that is managed to enhance biomass production, can provide the same or similar benefits as unmanaged CRP lands. Studies on soil erosion, chemical runoff, and wildlife usage on cropland converted to grasses support this proposition (23-26). Conversion of traditional row crops to no-till agriculture or to perennial grass cover demonstrates that the elimination of annual cultivation can lead to significant decreases in both erosion and chemical runoff (23, 24). Recent data from controlled plots with switchgrass in the southeastern United States (Table 2) demonstrate the dramatic declines in erosion and nitrate loss from soil within 1 year after establishment. High root density contributes to a high capacity to reduce soil erosion (27), to remove nitrate and phosphate from agricultural runoff when switchgrass is planted as filter strips (28), and to increased soil microbial activity (29) following establishment on degraded agricultural soils. Soil Carbon Sequestration. Increased sequestration of soil organic C (SOC) is a potentially important strategy for offsetting carbon dioxide (CO2) emissions to the atmosphere (21). Soil C can be enhanced through improved agricultural practices, including the planting of perennial bioenergy crops. 2124
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TABLE 2. Comparison of Changes in Erosion and Water Quality over Time for Switchgrass and Annual Row Cropping Systemsa Nitrate annual annual time erosion runoff loss (mg/L)b cropping system (years) (mg/ha) (kg of N/ha) (% N) mean switchgrass no-till corn switchgrass no-till corn switchgrass no-till corn
1 2 3
2.8 0.7 0.14 0.19 0.06 0.08
10.7c 2.6 0.7 1.4 0.3 0.9
24.0 3.1 0.8 1.21 0.28 0.64
3.41 2.18 0.57 0.77 0.72 0.90
max 18.5 16.5 2.53 8.25 2.90 3.12
historical studies (average of 11 sites)d
annual crops forage grasses
annual erosion (mg/ha)
annual runoff (% of rainfall)
95.8 0.169
19.3 1.86
a Data on switchgrass and no-till corn were collected in northern Alabama (slopes ranged from 4% to 7%) and included contrasts between switchgrass and corn (no-till) planted into a site previously in annual corn tillage. b Data are averages for 32 (year 1) to 6 (year 3) runoff events from each of two agricultural watersheds for each of the two cover types represented. c N application in the first year of this study was more than 2 times recommended rates for newly establishing switchgrass stands. This led to higher than typical initial % N losses. With canopy closure, in the following year, N utilization was high and N losses were very low. d Historical data contrasting erosion and runoff in annual row crops and forage grasses are included for comparison with observed rates in switchgrass. Those studies paired contrasts between cover types on slopes ranging from 2% to 16% (27).
The perennial growth habit of switchgrass leads to increased soil C and improved soil quality by eliminating the soil C losses associated with annual cultivation. Direct inputs of soil C also accrue through cycling of a deep, active root system (30). Such gains are ancillary to the primary C reductions gained through the substitution of renewable fuels derived from cycling of contemporary carbon through biomass for fossil fuels, which are a conduit for CO2 to the global atmosphere (4). Key issues in the capacity of perennial bioenergy crops to offset CO2 emissions through soil C sequestration are the rate of soil C additions, the long-term capacity of soil for C storage, and the stability of sequestered soil C over time. The establishment of the CRP has provided an opportunity to document the rate of net C sequestration by perennial grasslands. Maximum annual rates of soil C sequestration for aggrading perennial vegetation are usually
